Syndicate Accused in Phony 'Free' Grants Scam Has Assets Frozen

A federal court has frozen the bank accounts of Jeremy Johnson and his associates, along with 61 phony companies the Federal Trade Commission says bilked people out of more than $275 million with promises of phony "free" grants from the government.

The FTC says Johnson and his "I Works" collective touted free trial memberships via websites that promised riches or claimed grants could be obtained from the government to help pay personal expenses. Once hooked, I Works or one of its affiliates would load up consumers' credit-card accounts with charges for monthly fees and unwanted memberships.The scheme prompted more than half a million cardholders to get money back from their banks. Though the wave of chargebacks raised the attention of law enforcement, Johnson and I Works managed to skirt the problem by creating 51 "clean" shell companies to further dupe banks.

The FTC says Johnson and nine people "violated the FTC Act by misrepresenting that government grants are available for paying personal expenses, that consumers are likely to obtain grants by using the defendants' program, that users of their money-making products will earn substantial income, and that their offers are free or risk-free."

Johnson, something of a local legend in his home state of Utah, has said he is innocent. Following the deadly earthquake disaster in Haiti a year ago, Johnson, a pilot, bought two helicopters and personally flew doctors and medical supplies into the ravaged country from the neighboring Dominican Republic, according to the Associated Press and other sources.